Equipment Executive: Manage By Components, Not Machines

Control overall machine cost by tracking the life of key components

By Andy Agoos, Contributing Editor

March 30, 2012

Every equipment manager I know has some kind of financial report that tells him or her about their fleet costs. These reports typically include owning cost items such as depreciation, interest, insurance, property taxes, and some overhead and administrative costs associated with managing the fleet. The operating cost items typically include things like fuel, preventive maintenance, wear parts, and repair labor and parts. Usually the costs are tied back to a specific piece of equipment. And that’s good data to maintain.

Knowing a machine’s evolving cost per hour is an important metric. But today’s equipment manager should have more information to manage the components on his major equipment.

Everyone knows we buy a piece of equipment only once. The day we put that piece into service is the youngest it will ever be for our company. If it, for example, is acquired new, each component is at zero meter hours. These zero hour components all start off their working life together. A few components, such as the main frame, will probably last the machine’s full life. Other components, such as the bucket, undercarriage, or final drives, likely will be rebuilt or replaced several times in the machine’s life. The life we get from our original, zero-hour components is the greatest determining factor in the overall cost of the machine.

If the owner of a newly purchased wheel loader sits back and says to himself, “I don’t have to worry about my new loader for about three years or 5,000 hours,” this manager is giving away the opportunity to really lower his fleet cost. Doing the right thing from Day 1 is the only way to extend the life of those zero-hour components he just bought.

I’m not talking about managing components on every machine. Of course, we’re not going to track components of a cut-off saw or a plate tamp. And probably not for a skid steer loader either. But somewhere between a machine with a first cost of $50,000 (say a backhoe loader) and $100,000 (maybe a small loader) is where I suggest thatthe effort to manage the components will be justified. Certainly, any single machine with a first cost more than $100,000 would be worthy of component management.

Machines to monitor

Beyond costs, what machines should we manage by components? It depends on several obvious factors.

If the machine is critical to an operation and there are no planned backup spares—say a pipeline or utility crew excavator or a plant loader—that machine is likely managed more closely than a similarly priced machine that is not as critical. For those critical or expensive machines, we should carefully manage the primary components: engine; cooling system; turbocharger; battery/alternator; torque converter/transmission, final drives, undercarriage/tires; hydraulics; cylinders; blade/bucket; etc. For each component, the goal is to establish thorough inspections using visual, audio, heat guns, oil analysis, particle analysis, better lubricants, kidney loop filtration, and any number of tools to extend component life.

We all know the true saying that whatever we measure can be managed. Instituting a “condition-based maintenance” program to make all the critical component systems more overt just makes good sense. The aircraft industry has been doing it for years and these airline inspections are now routine and accepted as standard operating procedure. We can do this.

I suggest our goal would be to add 50 percent more life to those first zero-hour components we already bought and paid for. If you’re getting 8,000 hours on your finals now, let’s plan to get 12,000 hours with better component management. Is it easy? Of course not. But the savings are easily there. Manage by components; not by machines.